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Teachers, Lecturers and NIC

21st Sep 2009
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This week we are digging into something more curious, to wit the Social Security (Classification of Earners) regulations 1978. For some of you this may be everyday reading, but it was a while since they had been part of my focus. HMRC has been thinking about them, and even issued Revenue & Customs Brief 25/09 on part of the subject.

For those of you not up to speed here, these apply to self employed lecturers, teachers, instructors and trainers who are engaged to provide instruction in and educational establishment, and they require the person engaging them to operate Class 1 NIC, both employer's and employee's.

The first question is “why ?” : what is the rationale for singling out these people ? When you look at the regulations as a whole, the motive at the time would seem to have been the protection of vulnerable workers, since it also included office cleaners (and, specifically, telephone cleaners), some ministers of religion and various others.

One might think, too, that in 1978 there was very little attempt made to recategorise workers who presented as being self employed (indeed, there was not much effort made until the Inland Revenue took over the operation of NIC and could look at the tax and NIC positions simultaneously), and so this approach was the easiest way to collect more NIC. But we live in a different environment now, and HMRC goes out of its way in the brief to stress that this applies to the genuinely self employed. And it is hard to see that lecturers/trainers etc are in need of that protection (unlike, say, “self employed” bar staff).

At this time, too, NIC rates are high and present at their current levels a genuine obstacle for small businesses to employing more staff.

But this starts to get strange when you look at how the regulations define “educational establishment”, which in fact is almost infinitely wide. It includes “anywhere…(indoors or outdoors) where instruction is given”, so it would cover football coaching on the pitch, for instance.

Until recently HMRC took a fairly restricted line on this, and for instruction carried on elsewhere than what you or I would think of as “educational establishment” it excluded recreational or vocational instruction. But, for whatever reason, it has now widened its net and the manuals now say that it should be applied to instructors on courses which provide access to a particular job or the authority to conduct a particular activity in the workplace. So coaching players is outwith this but coaching for a coaching certificate is not.

In particular this has caused a problem for businesses providing training for first aiders, who will indeed be able to conduct a particular activity in the workplace.

A consultation is promised : But is this not a piece of legislation that is now merely burdensome to no useful purpose ?

Replies (2)

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By nrhealey
21st Sep 2009 14:01

Class 1 NIc on teachers

I am of the opinion from previous reading that the original impetus for this legislation was from Equity or similar arguing that Actors should be subject to Class 1 NIC so they could claim job seekers allowance ( or its predecessor) when 'resting'.

 I act for a number of peripatetic music teachers & think they should be eligable to claim jobseekers allowance during the summer holidays.Has anyone got experience of such a claim being successful?


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By gbuckell
21st Sep 2009 14:17

Consistent treatment
HMRC seem to want it every way. We have a case where HMRC picked up the fact that self-employed music teachers should be liable to NI because they were paid by the school. Then, to make matters worse, they said that their pay periods were the length of each half term which, of course, adds up to substantially less than 52 weeks. This has added some 30% to the bill the school now has to pay.

If this is correct then the idea of the earlier commentator of seeking jobseeker's allowance in the holidays would have merit!

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